Making money from land that is proving unprofitable for conventional agricultural uses is a challenge that is familiar to farmers up and down the land. And the consequences of what they do is of importance to all of us, particularly anybody concerned with the natural environment and development in the countryside.
Farmers may sometimes get a bad press for being concerned largely with their own interests, but some argue that this is unfair, including James Del Mar, head of Knight Frank’s rural consultancy.
“Farmers are pretty socially responsible and get little credit for it,” says Del Mar, who adds “most of the time they will do something for the greater good and if it is not to their detriment they will often go to a lot of trouble to do so.”
Farmers do need to make money, however, and these pages outline some of the ways they have been able to do so.Renewable energy
Wind turbines, solar panels and anaerobic digesters producing gas have all been used by UK farmers as power generators. Typically, a farm will use some of the energy generated for itself and sell some back to the National Grid.
But while there was a burst of enthusiasm for this a few years back, David Eynon, senior sustainability adviser at Colliers, says it may now have mellowed. This is not least because the rate landowners are paid for the fuel has fallen over the years as subsidies have lessened.
Eynon also warns that farmers who want to set up renewable schemes often have to contend with local communities that consider wind farms and solar panel arrays ugly blots on the landscape.
On the other hand, this sort of power generation is greener and will, therefore, be likely to get some support from a government keen to meet its carbon targets. The initial burst of enthusiasm may be over, but the underlying trend towards alternative sources of power is likely to continue.
Eynon says: “We may have seen a peak, but I don’t think there is any danger of it dying. What we are likely to get is better site selection.”
Providing ecosystem services
One way of simultaneously making money and being greener for country landowners is to get backing for environmental projects that benefit the wider community. At present, £400m a year is provided to UK farms under these types of schemes. The thinking is that well-managed farms do not just do themselves good, but others too. So, for example, landowners that are willing to take measures to manage hedgerows and ditches, provide wild bird cover or species such as grey partridge, yellowhammers and whitethroats, or conserve old stone walls may well be eligible for agri-environment grants. These are accessible through Natural England (www.naturalengland.org.uk).
The high-scoring options for funding are those that deliver the most effective conservation measures and also help prevent flooding, water pollution and soil contamination. These can be relatively simple things such as refraining from using herbicides in certain areas.
But it is worth bearing in mind that the current funding scheme comes to an end this year and will be replaced by another in 2015. Those that want to get funding applications in this year need to do so before 1 September, says a Natural England spokesman.
Biodiversity offsetting
Biodiversity offsetting is a system for rewarding farmers who undertake environmental improvement on their land with funding for carrying out that work. The system works through an environmental credit system where farmers or landowners register sites and potential projects – these could be for creating ponds, woodlands or restoring grasslands for example.The funding comes from developers whose planning permission means they need to reduce offset environmental impact by buying conservation credits. In other words, where a planning authority agrees a scheme as long as a developer makes good any environmental impact through the credit system then rural landowners could be one of the beneficiaries.
This, at least, is the theory. The problem is that, despite government backing, the schemes are taking a long time to be set up. Tom Tew, chief executive of the Environment Bank (www.environmentbank.com), the private company set up to deliver the biodiversity programme, says: “I used to describe the progress on this as glacial, but I’ve seen a programme on glaciers and it’s much slower.”
Although a government trial of the scheme in six areas has been going for a year, other schemes have not yet got under way. The good news is that three are imminent, near Oxford, in the Ribble Valley and in Humberside, although no details have been released yet. Tew says that two of those schemes involve private farmers and one is a conservation charity.
The money that farmers can make is up to them (they can charge what they like for their credits), although they may find that if they build too high a profit element into the cost of their credits developers will be less interested in buying them.
For the moment, Tew is concentrating on getting as many farm owners as possible to register on the scheme so that the Environment Bank can demonstrate to developers that it has a good supply of potential credits for them to buy.
Providing “easy” offices
Using redundant or under-used farm buildings for other purposes is an obvious route for farmers looking for alternative income streams. One example is Peelings Farm at Hankham, East Sussex. On this estate there are now six offices, plus two workshops and two storage areas. The estate, run under the authority of an old family holding, currently includes a carpenter, a potter and a firm that makes mobility scooters.
The site is managed by Oliver Robinson, an associate at Batcheller Monkhouse, who says the advantages include privacy, a pleasant setting, a decent courtyard outside the offices and a relatively good price. The most recent letting was at £11 per sq ft, where equivalent standard offices in nearby Eastbourne would have been nearer £15 per sq ft.
In other parts of the UK, notably Scotland, planning permission for redevelopment on farms is helped because the authorities back the re-population of rural areas. Gordon MacCallum, a director at consultant Kelpie Planning, says that the Scottish Government’s position means that where it used to be difficult to get permission to redevelop, it is now relatively easy, for both homes and businesses. MacCallum says the result is that some farms – such as Greenside Farm in Lanarkshire – have opted to get planning permission for houses and pass the land on to developers; while others such as Bankhead Farm, also in Lanark, put up various offices and other buildings and now rents them out.
Becoming a broadband ISP
Jason Beedell, partner and head of research at Smiths Gore, says that any landowner with tenants can boost income by providing good internet services. Beedell says that the government has pledged to improve broadband access to 90-95% of rural areas, but that it has cut back funding for this and pushed the target date back to 2017.
He adds: “Many areas can’t wait and are going to have to solve the broadband challenge themselves.”
The problem for traditional providers, such as BT, is that if the site where broadband is needed is more than 1.5km from the street cabinet, it won’t work. Investing in infrastructure for fibre or wireless broadband then starts to become feasible. Smiths Gore has advised on a number of estates that have done this and estimates it can produce an extra £2-£6 per sq ft in direct income from rural office space. Knight Frank’s Del Mar agrees: “Broadband underpins rental values.”
